Spain and UK lead Euro property boom

House prices in Spain have risen at a faster pace than anywhere else in the eurozone over the past five years, outstripping even a strong UK market, figures showed today.

Research by mortgage lender Halifax found the cost of a Spanish home had doubled between 2001 and the end of 2006, leaping by 57% in the past two years alone.

Over the same five-year period, prices in the UK were up 90%, more than double the 40% average across the eurozone as a whole.

Austria and Portugal recorded the lowest price inflation over five years, with prices increasing by 6% and 7% respectively, while in Germany prices fell by 5%, Halifax said.

Spain also has a higher percentage of homeowners than any other eurozone nation, with 82% of its inhabitants being owner-occupiers, compared with 55% in the Netherlans and 45% in Germany. In the UK, the owner-occupier rate is 70%.

Despite the 100% increase in prices over the past five years, Spain is not the most expensive eurozone country in which to buy property.

That title goes to Ireland, where the average house price reached £209,300 last year. This compared with an average of £190,900 in the Netherlands, £187,100 in the UK and £150,200 in Spain.

The cheapest properties in the eurozone were in Finland, where the average house price was £92,300.

Tim Crawford, group economist at Halifax, said Ireland's house prices had been driven by the country's strong economy, immigration and the creation of a large number of new homes.

He added that prices in Ireland were now on a par with those in the south-east of England, with Dublin as expensive to live in as London.

However, he said it was unlikely that prices in either area would sustain this level of growth over the coming years.

"We are possibly starting to see prices settle in areas where they are higher," he said.

The low interest rates and economic strength that have driven Spain's housing market are subsequently pushing prices up in France and Belgium, and Mr Crawford said he expected this trend to continue.